Local Government, Prompt Payment Act

By MELVIN W. SMITH
Department of Transportation

House Bill 467, introduced in the first session of the 84th General Assembly, has been signed into law and has a direct effect on every local government agency within the State. The law approved September 21, 1985 as Public Act 84-731 created the "Local Government Prompt Payment Act". The effective date of the new Act is July 1, 1987.

Although this "Local Government Prompt Payment Act" sounds innocent enough, the ramifications could require a major renovation of some local agency bookkeeping and bill paying procedures to insure compliance.

This Act applies to every county, township, municipality and all other local government units. The following is a synopsis of this act.

The appropriate local governmental official or agency receiving goods or services must approve or disapprove a bill from a vendor within 30 days after receipt of a bill or receipt of goods or services, whichever is later. Written notice shall be mailed to the vendor immediately if a bill is disapproved.

Any bill approved for payment shall be paid within 30 days after the date of approval. If payment is not made within 30 days, interest of 1% of the amount approved and unpaid shall be added each month until final payment is made.

If the local government official or agency fails to approve or disapprove a bill within the 30 day limit, the penalty for late payment of that bill shall be computed from the date 60 days after the receipt of that bill or the date 60 days after the goods or services are received, whichever is later.

This new law adds 109 paragraphs in 25 Chapters in the Illinois Revised Statutes. The added language is as follows:

"Purchases made pursuant to this Act shall be made in compliance with the "Local Government Prompt Payment Act" approved by the Eighty-fourth General Assembly."

Chapters 24 "Municipal Code", 34 "Counties" and 139 "Townships" have been amended to include this language in the paragraphs pertaining to agency responsibility and payment of debts by various local agency officials.

It is obvious that this law requires local agencies to be prompt and responsive to see that paper work is processed in a timely manner to insure that payment is made. All governmental agencies need to evaluate their present system to determine what steps should be initiated to enable them to meet the deadlines outlined. With this information in hand, and realizing that the effective date for implementation is July 1, 1987, a smooth transition is possible. If you have any questions about the possible effects of this law on your spending, (including MFT), contact your Legal Counsel. •

Page 6 / Illinois Municipal Review / May 1986